The Supreme Court addressed a batch of petitions (279) challenging the powers of arrest un-der the Customs Act, 1962 (“the Customs Act”) and the Central Goods and Services Tax Act, 2017 (“the CGST Act”), alongside the constitutional validity of certain provisions, particularly Sections 69 and 70 of the CGST Act. The lead petitioner, Radhika Agarwal, and others sought judicial review of these powers, questioning their alignment with constitutional safeguards of personal liberty under Articles 21 and 22 of the Constitution of India. The judgment, authored by CJI Sanjiv Khanna, with a concurring opinion by Justice Bela M. Trivedi, clarified the legal framework governing arrests under these statutes, post-amendment changes following the 2011 Om Prakash decision, and the safeguards required to prevent misuse of ar-rest powers.
The Court upheld the amended provisions of the Customs Act (Post-2012, 2013, and 2019 amendments) and the CGST Act, categorising certain offences as cognisable and non-bailable while retaining others as non-cognizable and bailable. It rejected challenges to the legislative competence of Parliament under Article 246A of the Constitution of India to enact criminal provisions under the GST regime. The judgment emphasised procedural safe-guards, including the need for “reasons to believe” based on credible material, informing ar-restees of grounds of arrest, and compliance with guidelines such as those in D.K. Basu v. State of West Bengal. It also addressed allegations of coercion to extract tax pay-ments, clarifying that voluntary payments are permissible but coercive recovery before adju-dication is not.
Justice Trivedi’s concurring opinion focused on the scope of judicial review under Articles 32 and 226 of the Constitution of India, advocating restraint unless there is manifest arbitrariness or statutory non-compliance. The Court dismissed the vires challenge to Sections 69 and 70 of the CGST Act but left open challenges to Section 135 (culpable mental intent) for future con-sideration. The matters were directed for final disposal before an appropriate bench starting March 17, 2025.
Facts of the Case:
The facts are derived from the judgment text (Pages 12-63 by CJI Khanna and Pages 64-76 by Justice Trivedi):
1. Background and Petitions:
The case originated from Writ Petition (Criminal) No. 336 of 2018 filed by Radhika Agarwal against the Union of India and others, alongside numerous connected criminal ap-peals and writ petitions (listed on Pages 1-11). These petitions arose from arrests made under the Customs Act and the CGST Act, challenging the powers of customs and GST officers to arrest and the constitutional validity of related provisions.
2. Legal Context:
The controversy stemmed from the Supreme Court’s 2011 decision in Om Prakash v. Union of India (2011) 14 SCC 1, which held offences under the Customs Act and Central Excise Act, 1944 as non-cognizable and bailable, requiring a warrant for arrest. Post this ruling, the legislature amended the Customs Act in 2012, 2013, and 2019 and incorporated similar classifications in the CGST Act, making certain offences cognisable and non-bailable (e.g., tax evasion exceeding INR 50 lakh).
3. Petitioners’ Allegations:
Petitioners, including Radhika Agarwal, alleged misuse of arrest powers by customs and GST officers, claiming arrests were made without sufficient evidence, often to coerce tax pay-ments before adjudication. They argued that such actions violated Articles 21 (right to life and liberty) and 22 (protection against arbitrary arrest) of the Constitution.
4. Legislative Provisions:
- Under Section 104(4) of the Customs Act (amended), offences like evasion of duty exceeding INR 50 lakh or dealing with prohibited goods are cognisable; others are non-cognizable (Section 104(5)). Non-bailable offences are listed under Section 104(6), with others being bailable (Section 104(7)).
- Under Section 69 of the CGST Act, the Commissioner can authorise arrest for offences under Section 132 (e.g., tax evasion exceeding INR 5 crore), which are cognisable and non-bailable (Section 132(5)).
5. Data Presented:
The Revenue submitted data (Pages 55-56) showing GST offence cases from July 2017 to March 2024, with arrests ranging from 3 (2017-18) to 460 (2020-21) and recoveries significant-ly lower than detected amounts, suggesting possible coercion.
6. Circulars and Guidelines:
The Central Board of Indirect Taxes and Customs issued circulars (e.g., 17.08.2022 and 25.05.2022) outlining arrest pre-conditions (e.g., credible material, reasons to believe) and clarifying that tax recovery requires adjudication, not coercion during the investigation.
7. Procedural Challenges:
Petitioners challenged the lack of formal assessment before arrests under the CGST Act and the constitutional validity of Sections 69 (arrest power) and 70 (summoning power), arguing these exceeded Parliament’s legislative competence under Article 246A of the Constitution of India.
Issues & Held in the Judgment:
The judgment addresses several legal and constitutional issues, which are as follows:
1. Legality of Arrest Powers:
Issue: Whether customs and GST officers can arrest without a warrant for cognisable (non-bailable) offences under the Customs Act and CGST Act, post-Om Pra-kash v. UOI (2011) 14 SCC 1, amendments, and whether such powers align with consti-tutional safeguards.
Held: The Court upheld the amended arrest powers under Section 104 of the Customs Act and Section 69 of the CGST Act.
Post-Om Prakash, certain offences (e.g., tax evasion over INR 50 lakh under Cus-toms, INR 5 crores under GST) are cognisable and non-bailable, allowing arrests without war-rants if the officer has “reason to believe” based on credible material (Paras 7-11, 58-60).
2. Constitutional Validity:
Issue: Whether Sections 69 (powers to arrest) and 70 (summoning powers) of the CGST Act are constitutionally valid under Article 246A, given the petitioners’ contention that criminal provisions exceed Parliament’s GST legislative competence.
Held: The challenge to Sections 69 and 70 of the CGST Act was rejected (Pa-ras 72-75). The Court held that Article 246A grants Parliament comprehensive power to legis-late on GST, including ancillary powers to prevent evasion through arrest and summons. These provisions are within legislative competence and align with the doctrine of pith and sub-stance.
3. Safeguards Against Misuse of Arrest Powers:
Issue: What safeguards must be followed to ensure arrests under these Acts do not violate personal liberty, including the requirement of “reasons to believe,” informing grounds of arrest, and preventing coercion for tax payments.
Held: The Court mandated strict compliance with safeguards:
- Officers must record “reasons to believe” based on explicit, credible material (Pa-ras 24, 59).
- Arrestees must be informed of grounds of arrest in writing, per Article 22(1) and D.K. Basu guidelines (Paras 25-26, 62).
- Customs officers, though not police officers, must maintain records akin to case diaries (Paras 19, 23).
- Arrested persons have the right to meet an advocate during interrogation, within visual but not hearing distance (Paras 26-27).
The Court endorsed CBIC Instruction No. 02/2022-23 (GST-Investigation) dated 17.08.2022, requiring justification for arrests beyond legal pre-requisites, such as the risk of tampering evidence or absconding (para 61). Also endorsed Instruction No. 01/2022-23 [GST – Investigation] dated 25.05.2022 on deposit of tax during the course of search, inspection or investigation.
4. Scope of Judicial Review:
Issue: To what extent, can courts under Articles 32 and 226 review arrests under special statutes, particularly regarding the sufficiency of evidence or subjective satis-faction of arresting officers.
Held: Justice Trivedi emphasized limited judicial review (Pages 64-76). Courts should intervene only in cases of manifest arbitrariness, mala fide intent, or statutory non-compliance (e.g., lack of material or failure to inform grounds). The sufficiency of material or officer’s subjective satisfaction is not reviewable at the investigation stage (Paras 9-10).
5. Pre-conditions for Arrest:
Issue: Whether arrests under the CGST Act require a prior assessment order under Section 73 or 74, or if arrests can be justified based on credible material indicating a non-bailable offence.
Held: The Court rejected the petitioners’ contention that arrests under the CGST Act require a prior assessment order. Arrests can proceed if there is sufficient certainty of a non-bailable offence under Section 132, provided reasons are recorded (Para 59). Howev-er, the benefit of the doubt applies, and arrests should not be routine.
6. Anticipatory Bail:
Issue: Whether anticipatory bail under Sections 438 and 439 of the CrPC applies to arrests under these Acts, even without an FIR, based on reasonable apprehension of arrest.
Held: Anticipatory bail under Sections 438 and 439 CrPC applies when there is a reasonable apprehension of arrest, even without an FIR, as per Gurbaksh Singh Sibbia and Sushila Aggarwal (Para 70). Contrary GST-specific decisions were overruled.
7. Coercion Allegations:
Issue: Whether the practice of compelling tax payments during investiga-tion, under threat of arrest, violates legal and constitutional norms.
Held: The Court found merit in allegations of coerced tax payments (Paras 63-67). Recovery requires adjudication (Section 79 CGST Act), not coercion during the investi-gation. Under Section 74(5), voluntary payments are permissible but must not involve force. Assessees can seek refunds if coerced, and officers face action for violations (Para 68).
Other Observations:
- The Court declined to examine Section 135 (culpable mental intent) of the CGST Act, as no prosecutions were initiated (Para 76).
- Connected matters were listed for the final hearing from March 17, 2025 (Para 78).
Conclusion:
The Supreme Court in Radhika Agarwal v. Union of India (2025 INSC 272) delivered a balanced judgment that upholds the arrest powers under the Customs Act and the CGST Act while reinforcing constitutional safeguards to protect personal liberty. It affirmed Parliament’s legislative competence under Article 246-A to enact criminal provisions for GST enforcement, dismissing vires challenges to Sections 69 and 70 of the CGST Act. The ruling clarifies that ar-rests for cognizable, non-bailable offences do not require prior adjudication but must be based on credible material and recorded reasons, aligning with Article 21 (Right to Life and Personal Liberty) and Article 22 (Protection against Arbitrary Arrest).
The Court’s emphasis on procedural compliance—such as informing grounds of arrest, main-taining records, and adhering to D.K. Basu guidelines—addresses petitioners’ concerns about misuse, particularly coercion for tax recovery.
By limiting judicial review to statutory compliance and rejecting scrutiny of evidence suffi-ciency, the judgment balances individual rights with the state’s need to combat economic offences effectively.
The recognition of anticipatory bail and the directive against coercive tax collection further strengthen protections against arbitrary action.
Overall, the decision reinforces the legal framework post-Om Prakash, ensuring that arrest powers under special statutes are exercised judiciously, with accountability, and without undermining the rule of law. It sets a precedent for harmonizing enforcement mecha-nisms with constitutional rights, leaving room for future challenges to specific provisions like Section 135 while directing unresolved matters for final adjudication.
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